City Hall expects to fall $14 million short of the $40 million it agreed to front the company building the new Las Colinas entertainment center.

Irving officials blamed a spike in interest rates for the shortfall, which has prompted the ARK Group to scale back the total cost of the project by ten percent—from $165 million to $149 million.

Under the deal signed in July, the city was supposed to front ARK $40 million for construction. ARK would fund the other $125 million—$44 million of which the city would later reimburse the company.

The city was going to borrow its $40 million, backed by a special hotel tax set up to fund the entertainment center.

But the market has changed since July, said project head Jim Blagg. "The rate went up 103 basis points ... in about two months," he told me.

For technical reasons, the city is also planning to take out a more expensive type of loan than it originally planned. Upshot: it can only borrow $25.7 million—about a third less than it planned to front ARK.

Accordingly, ARK now plans to reduce the project's $165 million cost by ten percent to $149 million, mostly to cover the city's shortfall. The company's share of funding will fall by a small amount—from $125 million to $123 million.

Company co-owner Rick Lazes told me he didn't expect the change to affect the finished Irving Music Factory, due to open in 2016.

"The building development is exactly the way it was presented to the city," he said. "We haven't changed the scope at all."

Lazes said a Channel 8 report blaming his company for the money issue was "not accurate," and I agree.

Contra that report, ARK does not want "to reduce its financial commitment to the project by 10 percent." The company's funding will decrease by less than two percent, as a reaction to a much larger 36 percent shortfall on the city's end.

A final caveat: none of these numbers are final, and the market is still in flux. We won't know exactly how much cash the city and company are putting up until the financing is secured.